ECONOMY: Factory sector picks up, a little

There was some acceleration for the manufacturing sector in Inland Southern California last month, but much of the wait-and-see attitude still permeates factory owners’ attitudes, a report released Thursday, Nov. 1 found.

The Purchasing Managers Index for San Bernardino and Riverside counties increased sharply in October, from 43.6 the previous month to 49.1, the Institute of Applied Research at Cal State San Bernardino reported. The September reading was the lowest in the last three years, and factory executives blamed the uncertain situation of the federal government’s fiscal condition and the pending election for the slowdown.

The October report is still below 50, the level that indicates that the sector is growing. However, there were sharp increases in production and in new orders, suggesting that at least some of the phones in Inland factories are still ringing.

The index is closely watched because not only does it suggest how busy factories will be in the next few months but it also indicates whether local suppliers will be providing more raw materials. Also, purchases of raw goods and the shipment of finished product would mean more business opportunities for Inland companies in the shipping and logistics industries.

Nationally the index increased slightly, to 51.7 from 51.5, the Tempe, Ariz.-based Institute for Supply Management reported. The national index was also buoyed by new orders and increased production.

Both reports were compiled before Hurricane Sandy disrupted numerous business operations, especially on the East Coast. Nationally, analysts said better consumer demand was overriding what appeared to be a lack of business investment in some areas.

Raymond Sfeir, a Chapman University economist, said that consumers have a little more short-term flexibility now, but business owners don’t want to make decisions on expansion and run the risk of making a mistake.

“There’s no doubt they’re on the sideline, trying to figure it out,” Sfeir said. “If there’s one thing people in business hate more than anything else, it’s uncertainty.”

Sfeir is the key economist for Chapman University’s quarterly study of the state’s manufacturing sector, and he believes California will improve sharply by the end of the year, unless there are some unforeseen occurrences.

Things could be a little more brisk right now at Precision Molded Products, a Riverside firm that makes rubber, plastic and carbon compound products used as sealers for aircraft. But Chris Kozloski, the company’s president, said the future customer base is very promising.

However, Kozloski, a U.S. Air Force veteran, said that politics and the nation’s fiscal issues are a factor for the company’s future, running from future contracts with military providers to programs that provide financing for businesses his size.

Bud Weisbart, co-owner of A & R Tarpaulins of Fontana, said his order book is fairly full right now, but he said a manufacturer today has to carefully design an organization that can adapt to conditions.

“Our products are needed and obviously there are opportunities, as long as we can do what it takes to create an understanding about marketability,” Weisbart said.

Inland factory owners are asking about the so-called “fiscal cliff” and what it might mean, said Vincent McCoy, executive director of the Inland Empire Small Business Development Center. McCoy sits on the region’s manufacturing council and said that, without considering the federal discussions and the election, most seem optimistic.

“All those things are going to affect businesses,” McCoy said. “So they keep one card held back.”